Tips To Control Your Team Member Wages Within Budget

→ Attend at no cost, earn 5 hours of CE credit, and learn exactly how to successfully resign from PPO plans. Register now at www.rid.academy

Intro: This is The Thriving Dentist Show with Gary Takacs, where we help you develop your ideal dental practice—one that provides personal, professional, and financial satisfaction.

Gary Takacs: Welcome to another episode of The Thriving Dentist Show. I’m Gary Takacs, your podcast co-host. We have a great episode, uh, for you today. This episode came at the request, uh, of a number of our listeners, and the title of this episode is Tips to Control Your Team Member Wages Within Budget. Very, very important topic and excited to share some very useful information with you today.

Uh, thanks, uh, to our listeners who have, who have requested that topic, and, uh, we try to be responsive and, uh, respond to your wishes. And here you are. Um, well, before we get into that episode, I have two quick announcements to make.

Uh, mark your calendars. Coming up, uh, in October is our fifth annual Reducing Insurance Dependence Academy Summit. It’s happening on Friday, October 24th. This is our fifth annual summit. Uh, it’s from noon Eastern Time to 5:30 PM Eastern Time—five and a half hours.

Um, if you stay for the entire amount, you’ll get five hours of CE credit. We are required to have a couple of short 15-minute breaks in there. Uh, so you’ll get five hours of CE credit. Uh, we’ll have some keynote, uh, lectures. Uh, we’ll have a variety of different panels, uh, and we’ve got a kind of a surprise panel for all of you that I think you’ll enjoy.

Uh, all of the topic is all built around how to successfully resign from PPO plans. Uh, mark your calendar now, uh, for Friday, October 24th, and again, that’s noon Eastern Time to 5:30 PM Eastern Time. If you’re on the West Coast, Pacific Time, uh, that’ll be, uh, 9:00 AM Pacific Time to 2:30 PM, uh, Pacific Time.

Um, there’s no tuition. You’re there attending as a guest, uh, as a courtesy of your listenership—appreciation for your listenership. However, you do need to register. Go to www.rid.academy. RID stands for Reducing Insurance Dependence, so www.rid.academy.

There’s no tuition, five hours of CE credit, and more importantly, you’ll be armed with all the information you need to successfully resign from PPO plans. Come join us.

Second announcement I have today is we have a marketing tip, uh, from Naren. And in this marketing tip, Naren’s gonna answer the question: how to accurately track the source of your new, new patients? Very, very important topic.

No further ado, here’s Naren on how to accurately track the source of your new patients.

Naren Arulrajah: The marketing tip I’ll be talking about today is: should I track the source of my new patients? And if so, how? This is Naren, the founder of Ekwa Marketing and the co-host of the Thriving Dentist Podcast. It’s a great question that I keep getting asked a lot, and my answer is, absolutely—you must track the source of your new patients.

There’s two ways you can track it. The easiest and the most powerful way is using what we call a call tracking number. So, for example, if you’re running Google Ads, have a number—a tracking number—to track Google Ads. If you’re doing social media ads, same thing—a separate number. If you’re doing an event, you know, have a different number. If you’re running an ad in a magazine, have a different number. Today, you can get these numbers, and your marketing company should be able to provide these numbers for you.

And, of course, you also need to have a tracking number for your SEO—search engine optimization—marketing. The beauty of this is you know how much you’re spending with each type of marketing activity and how much, uh, each one of those activities are producing. So, for example, you spend a thousand dollars on SEO and you got 20 new patient calls, and, you know, these patient calls came because they came in through that tracking number.

Same way with Google Ads—you spent $5,000 and you got 20 new calls, so you know that you spent $5,000 and you got 20 new calls. So now you can figure out the cost of a new patient from each marketing method. This allows you to really fine-tune your marketing and spend more money on the things that are costing you the least.

If you don’t have this, then you could be spending, you know, $10,000 on four different techniques, and one technique might be five times better than the others. Like, typically, SEO done right could—should—be the best technique in terms of cost per new patient acquisition. But regardless of which one is number one, which one’s number two—you don’t know. And sometimes the difference in cost of acquiring a new patient could be four, five, ten times differential. So you get ten times the results for the same amount of money with one technique than the other.

So I strongly recommend using, um, a tracking number. Today, 95% of new patients call your office first, so the tracking number is the best way to go. But some do come through chat—chatbots. Some do come through, uh, you know, filling out a form. So definitely you can also have different landing pages.

So, for example, you could, you know, set up separate landing pages for all your Google Ads, so all the leads coming through that would only come through that page. So they would fill out a form on that page, or they would call a separate number on that page. So you can really get nuanced in understanding what’s working and what’s not. Without knowing this, it’s kind of like spending a lot of money on marketing and wasting, you know, a lot of it, and only some of that marketing dollar is working for you.

So I strongly recommend: start here if you don’t have it. The other advantage of tracking numbers is you can now record the calls and even listen to the calls to see how you are doing. You know, uh, converting a patient who’s calling because they were referred by another doctor might be a lot easier than converting a patient who’s coming through ads, or coming through SEO.

Ads are the hardest because people don’t trust you. But even SEO—they don’t know you, right? They’re not your friends. They were not referred by somebody. So you still have to earn their trust. So now that you’re tracking their phone call, you can analyze how’s your team equipped to handle those types of calls.

So hopefully this tip is really useful to you. If you like, um, what I had to say and you have more, more questions on marketing, book a marketing strategy meeting. Go to ekwa.com/td In this marketing strategy meeting, we study your marketing, your competition, and give you both a report card and a plan. So it’s gonna be a really good use of your time, where you can get your questions answered as you fine-tune and take your marketing to the next level.

Naren Arulrajah: Welcome back to the Thriving Dentist Coaching and Action Segment. This is Naren, your co-host. You know, I am really excited to invite you all to our fifth annual summit of the Reducing Insurance Dependence Academy. Uh, it’s a flagship event we do, and it’s on the 24th of October. Like Gary mentioned, it’s gonna be amazing. So definitely mark your calendar. If you have other plans, you know, move them away, but hopefully we are giving you enough of a notice, so you probably don’t have other plans. So book your calendar from 12 to 5. You’re gonna learn a lot.

Uh, we are very proud to have helped literally, you know, hundreds of practices over the years, one by one drop PPO plans and become either completely fee-for-service or, you know, end up with one or two plans. So we are really proud of that, and literally, we have 1,200 RID Academy members—everyone on that journey. So looking forward to it. And, uh, just go to RID Academy. There’s lots of information, and if you have any further questions on, like, how to track results, hey, feel free to book a meeting with my team. We would love to help. Go to ekwa.com/msm. 

Gary Takacs: And Naren, uh, back to the RID Academy Summit. Um, uh, I don’t think it’s inaccurate to say this has become the virtual event of the year in dentistry.

Naren Arulrajah: I agree because 90% of people are kind of sick and tired of PPO plans, you know?

Gary Takacs: It’s growing every year. Our attendance at the RID Academy Summit has doubled every single year. Let’s see if we can double it again. Now, we had massive attendance in, uh, uh, 2024. Uh, so it’s a bit of a heavy lift to expect double attendance in 2025, but I think it speaks to, um, just the importance of the topic. Many dentists have just realized that with, uh, costs rising—you know, with the inflation—uh, everything we buy in a dental office is going up, right? Uh, well beyond the cost of normal inflation, but especially wage inflation, which kind of gives us a, a tag into today’s, uh, uh, podcast topic.

Wage inflation, in particular hygiene wages, have really, really escalated. And in a normal business, if your cost of doing business goes up, then you can raise your prices to reflect your increase in cost of doing business. Does that make sense, Naren?

Naren Arulrajah: Absolutely.

Gary Takacs: That’s what businesses do. Um, uh, and businesses are able to do that. Now, they’re sensitive to it—they don’t wanna raise prices beyond market conditions. Uh, but when your prices go—if you own a restaurant and your cost of providing really high-quality meals goes up—then you’ve gotta raise your menu prices. However, uh, 90% of dentists—more than 90% of dentists in the United States—have lost the ability to do that because you don’t set your fees anymore. Yes, the PPO plan does.

And why in the world would you want a third party that has no interest in your success setting your fees? Well, that’s why this event has become the premier virtual event in dentistry. Come join us Friday, October 24th. Uh, we’ll announce in future Thriving Dentist episodes more details about it. But for now, mark your calendar and make plans to attend. You’ll be well rewarded, uh, not only with five hours of CE, but with, uh, truly actionable information you can apply the next day.

Naren Arulrajah: I’m really looking forward to this, Gary, and I think it’s a good lead-in to our conversation today because, uh, today’s topic is all about tips to control your team member wages within budget.

And, uh, one or two people who had a lot of influence on me when I was growing up was, uh, Michael Jordan, uh, and of course his coach—the legendary Phil Jackson, right? Who won 11 NBA championships, six with Michael, and I think the other five he won with the Lakers. I mean, he’s one of those rare, rare, rare individuals. He’s like a Zen master when it comes to winning basketball games.

Uh, and he talks about this idea that the best defense is the best offense. Yes, today it’s all about defense and wages and controlling them, but I really think the better answer is, you know, how do you raise your fees to keep up with the, you know, cost of living? You know, like, you can’t make the world stop. You know what I mean? Today the wages are 50% more. Like, you can’t tell your team members, “Well, because we are on a PPO plan, you know, you have to now take a 50% pay cut.” It just doesn’t work that way. You know, people will say, “Oh, I’ll go find some other job. I’m not gonna work for you because, you know, that’s all you can afford,” right?

Gary Takacs: Today, Naren, in dentistry, um, if a team member wants to find another job, right? Um, I can confidently say whether that team member is an assistant, a hygienist, an admin team member, um, an office manager, whatever role—a sterilization tech—that person can likely find another job in less than a two-hour job search.

Now, uh, that’s the condition today. There are more job openings than there are people applying for them. That’s especially true among hygienists—right? Especially true.

Um, and I’m a firm believer, um, that, uh, in order to attract and keep quality team members, we need to pay them well, and we need to provide an incredible work environment for them. We need to create the best game in town so they don’t wanna go anywhere else, right?

Um, so I’m not about, uh, you know, trying to, uh, you know, cut wages, uh, in this market condition.

Gary Takacs: Um, I, I, I do think it has to work for the office and work for the, you know, work for the team member as well. So, let’s begin with the end in mind. You know, that’s a Stephen Covey concept—habit number one. Let’s begin with the end in mind. So what is an appropriate budget for team wages? Well, I’m gonna define that for you right now.

Uh, what we use for our Thriving Dentist coaching clients is we want total team wages—this is excluding any doctor compensation, whether it be owner doctor compensation or associate doctor compensation—so everybody but the doctor, we want that to be at 28% or less. All in. All in. I’ll explain what that means.

Now, when I give you a percentage, the percentage is a percent of your collections—not a percent of expenses, it’s a percent of your collections.

So, for example, Naren, um, if you had a practice that collected $2 million—I’m just picking a round number to make my math easy—and I’m using a goal of wages to be 28% or less, that means that I’ve got a budget of $560,000 for my team—my total team member compensation—$560,000.

And when I say all in, let me explain what I mean by all in. Not only do I mean wages, but all the related expenses of employing someone. So all the taxes—FICA, FUTA, unemployment insurance tax, payroll service—benefits like matching 401(k), if you do matching 401(k), if you do a uniform allowance—any cost related to employing a team member goes into that 28%. And the goal today is to have that be 28% or less.

And that’s getting harder and harder to do, um, given the rising wages that we’re experiencing.

And so let me, uh, share with you some, some tips to control your wages to that budget. Um, I want you to be able to have very well-paid team members. I want, I want it all, Naren. I want you to have very well-paid team members. And I, I really don’t see that as a conflict to the owner-dentist. You know, I, I see it as mutually beneficial. That’s how you attract and keep quality team members.

So I want your team members to be very well-paid, but it also has to work for you as well. And if it works for you, it means you’re keeping that control to 28% or less.

So one of the things I’d like to point out is the concept of supply-side economics. Supply-side economics. If your wages are too high—for example, let’s say you do the computation and you discover that your wages are at 30%—it doesn’t necessarily mean that you’re overstaffed. It doesn’t necessarily mean that people are overpaid.

If you ever wonder if any of your team members are overpaid, I’d encourage you to ask them. Naren, how do you think that conversation is gonna go if you ask an assistant, “Hey, I think you’re overpaid.” What do you think?

Naren Arulrajah: Uh, well, I think, “That’s what I’m worth.”

Gary Takacs: No, they’re gonna say, “No, I’m not overpaid. In fact, I was gonna ask for a raise.”

Gary Takacs: So it’s not necessarily that you’re overstaffed—although it could be. It could be that you’re overstaffed. Um, it’s not necessarily that individuals are overpaid, but it’s important to have some benchmarking. We’ll talk about benchmarking for that. It’s important to have some benchmarking.

But when your wages are over 28% all in, it typically means you’re not producing enough to support the team that you have. You’re not producing enough. So, supply-side economics is—we solve it not by cutting costs. We solve it by increasing production. Increasing production. Does that make sense, Naren?

Naren Arulrajah: Yes. Yes.

Gary Takacs: So, you know, let me use an example. If we can grow your practice $100,000 a year in collections—$100,000 a year—let’s look at how profitable you are in those growth dollars. Now, I’m gonna assume that we’re doing that with the same team and the same hours. Same team, same hours. We’re not adding more hours, and we’re not adding more team members.

The only expenses that go up when you grow your practice are the variable expenses. And most expenses—almost every expense in dentistry—is a fixed expense. Fixed expense. And I call wages a fixed expense, even though technically it’s not the same number every month, because it depends on your hours and the workdays and the way the month worked with the calendar. But I call that basically a fixed expense within a range.

The variable expenses that go up are expenses that are tied to increasing your production. And there’s really only two in a dental practice: lab and consumable supplies.

So, if you’re using an outside lab, and let’s say you’re not using CEREC or a mill—so everything goes to an outside lab—every lab-related dentistry goes to an outside lab. My budget for lab is 8% or less. And again, that’s a percent of revenue—8% or less.

If you are using a mill or you’re using CEREC, then it’s 4% or less because a significant amount of that is gonna be done by your mill or gonna be done by your CEREC.

By the way, I don’t think I’ve ever seen a practice that doesn’t have a lab expense of some sort, where everything’s done with a mill or everything’s done with a lab. There’s going to be some lab expense. So, when you are using CEREC or a mill, that expense comes down to 4%.

Let’s use the higher number, Naren—8%. So I’ve got 8% for lab, and then my budget for consumable supplies—what are consumable supplies? All the materials that we use to generate the dentistry that we provide in your office. Composite material, for example, would be a consumable supply. My budget for consumable supplies is 6% or less.

So, Naren, let’s add those two together. Lab expense at 8%—assuming you’re a non-CEREC, non-mill office—plus 6%. So 8 plus 6 is 14%.

Theoretically, no other expenses go up. Theoretically. But Naren, I don’t know what happens, but somehow some other minor expenses creep up. And I always say maybe we chose to buy the pillowy soft toilet tissue. Minor expenses that go up.

Let’s use another budget of 6% to make a round number. 14 plus 6 plus 6. Naren, check me on my math. What am I at? 14 plus 6 plus 6?

Naren Arulrajah: 14 plus 6 plus 6 is 26, correct?

Gary Takacs: Uh, 20%—14 plus 6, uh, or excuse me—plus 6…

Naren Arulrajah: Plus 6…

Gary Takacs: I was combining them already. Uh, 8% for lab, right? Plus 6% for consumable supplies, right? Plus 6%. That’s 20.

Naren Arulrajah: 20%.

Gary Takacs: So your increased overhead—grow your practice—assuming you’re gonna do the dentistry yourself, doctor, then you’re 80% profitable in the top dollars.

Naren Arulrajah: Right. So, so this is a really interesting trick for any entrepreneur who’s looking at scaling. And I’ve seen people in private equity use this. So they know what they need to do to break even, and then they know every hundred dollars they add—most of it, you know, 50, 60—in dental businesses’ case, even 80% is profit. As long as your expenses are fixed. Of course, at some point you need an extra hygienist, extra whatever, then…

Gary Takacs: Yeah, it does have a limitation. It does have a finite limitation. But any practice—any of our listeners—could easily grow their practice $100,000 a year without even breaking a sweat.

Naren Arulrajah: Exactly.

Gary Takacs: In fact, I’m gonna go so bold—I’m gonna double it. I’m gonna say, what if you grew $200,000 a year in collections—same team, same hours?

Naren Arulrajah: That’s an extra $160,000 in profit.

Gary Takacs: And what does that do to your wage overhead as a percentage?

Naren Arulrajah: It brings it down. You know, let’s say it brings…

Gary Takacs: It way down.

Naren Arulrajah: Way down. Exactly.

Gary Takacs: Now, now, now there’s another—the dirty secret the insurance companies don’t want you to know—the best thing you could do to control any of your expenses is quit giving 45 to 50% of it to the fat cats at the insurance company.

Naren Arulrajah: A hundred percent.

Gary Takacs: You know, Naren, offices that are PPO providers—there’s a difference between what they produce and what they collect. And the difference is the adjustment in the fees that you’re required to give to the PPO companies. Quit giving away 45 to 50% of your hard-earned production to the fat cats at Delta, right? How about that? That alone could bring your wages in line, because now you can collect more. You’ve already paid to produce it. I have a great case study.

Naren Arulrajah: One of your clients, Gary, that we recently spoke to—he was able to increase his net profit by $300,000 where his collections, um—you know, sorry—where his production didn’t go up. Actually, it went down a little bit. So, in other words—

Gary Takacs: Let me use the example. This is a case study. Let me use it. I won’t use his name, but I’ll use the example. And the cool thing about this case study is that it represents two calendar years back to back. This was a client in our Thriving Dentist coaching. In 2023, this particular client was in-network with eight plans—eight PPO plans—and it represented about 70% of his practice. So it was heavily PPO-involved.

In 2023, this office produced $1.9 million—a strong solo dentist practice, big strong hygiene department. They produced $1.9 million and collected $1.4 million. The $1.9 million was based on UCR fees. So, they produced $1.9M and collected $1.4M. But we timed it during 2023 so that by the very end of the year—by December 31st, actually January 1st—he would be completely out-of-network with all eight of those plans.

So now we go forward into 2024. And I want you to watch what happened in 2024. Now he’s completely out-of-network the entire year. Same team, same hours, same everything. The office now produced $1.8 million—Naren, the production went down from $1.9M to $1.8M. Normally, we don’t like to see production go down, but that’s not the end of the story, because the office collected $1.7 million.

Remember: the previous year, produced $1.9M, collected $1.4M. The next year, produced $1.8M, collected $1.7M. Which would you rather, as a listener? Take as long as you like. Which one would you prefer? Yeah, I’m going for the collect $1.7M.

By the way, the difference between the $1.7M and the $1.8M was his membership plan discounts. His in-office membership plan discounts.

But now, there’s a hidden math equation there, Naren. The first year, his overhead was based on needing to generate $1.9 million worth of dentistry, right?

Naren Arulrajah: Yes.

Gary Takacs: Second year, his overhead now is based on producing $1.8M. What actually happened to his overhead?

Naren Arulrajah: Went down. As a percentage, it went down because he’s keeping more of his money.

Gary Takacs: If his overhead was 60%, yeah, then it went down—$100,000. His overhead went down $60K. So not only did he collect more—$1.7M—but he had more in his pocket because his overhead went down.

So one of the best things you can do to get your wages in line is to successfully resign from PPO plans. And you don’t have to go all the way. You know, we call it Reducing Insurance Dependence because you don’t have to go all the way to fee-for-service to significantly improve your practice.

Every time you successfully resign from a plan, you are improving your practice. If your goal is to go all the way, then I’m gonna be your biggest cheerleader, because that’s the way to get the most out of it. But you don’t have to. If you’re worried about a particular plan, a particular employer, we can navigate that.

But if we could kick the low-hanging fruit to the curb, that’s gonna radically improve your practice.

Naren, I want to hit pause here on the Coaching and Action segment. We’ve got some really good questions coming up in the Q&A segment that allow us to go into more depth on tips to control team member wages within budget.

But I hope I’ve got all of our listeners really putting your thinking cap on, thinking about what might apply in your practice to get those wages so that they’re in line—in budget. But let’s hit pause here and go to our Thriving Dentist Q&A segment.

Naren Arulrajah: Welcome back to the Thriving Dentist Q&A segment. This is Naren again.

Gary, I enjoyed the Coaching and Action segment. A relevant topic, and you gave a lot of interesting ideas both on the offense as well as the defense—on how to, you know, think about wages and expenses and revenue, and how to, you know, create a better future for yourself—you, the practice owner.

So, Gary, let me ask you question number one I have for you. I have been successful in hiring a new hygienist after a long search. However, the wage we agreed to is higher than what I’m paying my current hygienist. Should I raise the wage of my existing hygienist to the new hygiene wage?

Gary Takacs: Wow, what an interesting question. Uh, thank you, whoever submitted that question. And that question has a lot of moving pieces. Uh, but the way I’m gonna answer that question is—it depends. It depends.

Um, one of the things it depends on is if the hygienist you have hired—the new hygienist—has a different skill set than your existing hygienist, that could justify differences in compensation. Does that make sense, Naren?

Let’s say your existing hygienist is a hygienist that doesn’t have particular expertise in conservative periodontal therapy. She’s doing mostly what we would call routine, you know, prophy. And your new hygienist has extensive skills in conservative perio therapy—that would justify a difference in compensation.

But if they are similar in their skill set—now, I might not win any fans with the answer I’m about to give you—but I think if you give it some thought and think about the big picture, think about the long game, you’ll agree with my suggestion. Okay, here goes… drumroll, please.

If the skill set is similar, Naren, yeah—I’m gonna recommend that you offensively raise your wages to your existing hygienist to match what you’re paying the new hygienist. I would suggest you do that because invariably, they will talk. Do you believe that, Naren?

Naren Arulrajah: Yes. Yes.

Gary Takacs: And then how is your existing hygienist gonna feel if this new one—who, again, we’ll assume has a similar skill set—is being paid more than her, who’s been there for a long time? How is she gonna feel? She—or I should be fair—he or she. There are many male hygienists today. How is the existing hygienist gonna feel?

Naren Arulrajah: They’re not gonna be happy.

Gary Takacs: And remember, that hygienist can successfully launch a job search with about two hours of effort. Remember how hard it was to hire this new one? Do you really want to go through that again?

So I would offensively—I wouldn’t wait for her to come confront you on it—I would deal with it offensively. I’d just be very candid.

Naren Arulrajah: I remember, Gary, you had a ninja move. Can I share what I’m thinking and then tell me what you’re thinking, please?

So sometimes—like, I used to train in ninjutsu when I was in Illinois for seven months—and it’s pretty interesting. And the whole idea is you’re using your opponent against the opponent. So you’re using his weight against him. It’s all these crazy moves where it’s almost like it feels like you’re not doing anything, but you’re doing a lot. It’s so interesting the way they think about things.

So the ninja move that I got from you is: what if you set up the compensation where they get paid more, but it’s based on the revenue they’re driving? In other words, you give them a minimum, and then there’s no limit. There’s no limit as to how much you can make for the same amount of work you do. Like, in other words, there’s no ceiling. Can you talk about—I don’t want to give away the ceiling.

Gary Takacs: Yeah. So, um, this can be applied in the right practice situation. It’s not right for all practices. However, in the right practice situation, we can have a hygiene compensation that is based on a guaranteed hourly rate—whatever that would be for your community—a guaranteed hourly rate against a commission of 28% of their collections on their production.

Right? Does that make sense, Naren?

Naren Arulrajah: Yes.

Gary Takacs: So—and we can do it whichever is greater. So they get a guaranteed hourly rate—something they know they can count on no matter what.

Naren Arulrajah: So if they do $2,000—just to kind of get some numbers—they would make 28% of $2,000. That’s $560. $560.

Gary Takacs: Right, got it. So that obviously would include some conservative perio therapy. And they could get $560, which would be significantly higher than an hourly rate.

Naren Arulrajah: On an hourly wage, if you were to say $50 an hour for 8 hours, that’s $400. You know, I’m just thinking out loud here. So the $560 would be significantly higher than $400. And it didn’t come out of your pocket, because they made it. They made you $2,000 and you’re only giving a piece of that. So it’s like a brilliant move where it didn’t cost you a dime more—actually, it ended up making you even more money.

Gary Takacs: Now, it’s very difficult to hit those high numbers of production when we’re giving away 45 to 50% to the fat cats at the insurance company.

Naren Arulrajah: So you’re saying it won’t work for PPO plans?

Gary Takacs: Wait a minute. I can tell you one variable that comes into play on successfully resigning from PPO plans, okay? When the team members are behind it—are in favor of it—it goes extremely well. Who are the patients gonna talk to about the fact that you’re going out-of-network? Who are the patients going to talk to? They’re gonna talk to the dentist about that—they might—but who are they more likely to talk to?

Naren Arulrajah: The team members.

Gary Takacs: Team members. And if you have team members that are supportive of you going out-of-network, it goes extremely well. They’re just as motivated as you to go out-of-network.

Naren Arulrajah: Because now they need more money—just like you want to make more money.

Gary Takacs: Yeah, it does work. It does work. Now they’re on your side. Now your hygienist cares about the adjustments because it’s affecting him or her.

Naren Arulrajah: Right.

Gary Takacs: So now they’re seeing the world through the same lens that you see it.

Naren Arulrajah: Right. So it’s win-win. We all want to work together.

Gary Takacs: I mean, I’m not trying to be cynical here, but if you’re an hourly-rate employee, right? Does it matter to you whether you’re in-network or out-of-network?

Naren Arulrajah: No. I mean, does it matter that I do bigger cases or not? Like, nothing matters, right? Because I get the same amount. You know, no skin off my back.

Gary Takacs: Yeah. I like to think that most team members in dentistry genuinely want to see the practice succeed. But on just a very analytical level, it doesn’t matter if they’re seeing a PPO patient—there are bad Delta plans that reimburse $57 for a hygiene appointment. Total.

Naren Arulrajah: That doesn’t even pay the team member.

Gary Takacs: That doesn’t even pay the hourly rate in many states—let alone the room, the supplies, the equipment, everything else.

Naren Arulrajah: Sterilizing, booking—all of that stuff.

Gary Takacs: Yeah. It doesn’t pay for any of that. So, however, now you are aligning your goals with the team members’ goals.

But Naren, to answer that question very specifically—I would do this offensively, right? And I would raise the wages so that you don’t have to deal with the fallout of an upset team member feeling slighted. Remember, that hygienist can get another job in a matter of two hours.

So I would be on the offensive here, and then I would absolutely double down and say, let’s figure out how to grow the practice so this works for everybody. It’s gotta work for you ultimately as well, right?

Naren Arulrajah: Thank you, Gary. Appreciate it. Let me go to the second question I have for you. That is: Is there a good source of information to benchmark appropriate wages in my area?

I think this came from one of your clients, Gary. They love the fact that you help them benchmark fees, and many of them are seeing an extra $200,000, you know, in their pocket without doing a lot—thanks to that service you offer to your clients. So they’re asking you kind of a similar question.

Gary Takacs: Most wage information is nothing more than chitchat and rumor. Chitchat and rumor. “Oh, I have a friend that’s making $80 an hour.” Yeah… and, you know, it’s just—it’s literally fiction.

Naren Arulrajah: You’re saying don’t listen to those anecdotal…

Gary Takacs: Anecdotal information is not helpful here.

I personally think one of the best sources of information is your accounting firm, especially if your accounting firm is a member of the Academy of Dental CPAs. They’re friends of ours, they’re friends of the podcast. We’ve had many of their experts as guests on the Thriving Dentist Show.

The Academy of Dental CPAs is an independent association of 24 independently owned accounting firms all over the country. They represent—collectively—over 12,000 practices. And they really understand dentistry. Over 12,000 dental practices.

And the ADCPA members can provide you—anonymously—with wage information in your area. In other words: what is the range of assistant wages? What’s the range of hygienist wages? What’s the range of an admin team member or office manager? It has to be done anonymously for privacy purposes, but they can provide you that. And that information is scientific. It’s not anecdotal evidence.

And if you’re not already working with an ADCPA firm, I would highly recommend it. Go to—uh, they’re a nonprofit association—go to www.adcpa.org,  and you’ll see their website and you can find a firm that’s either near you or, you know, research the firm you like.

Geography really doesn’t matter anymore with accounting firms. They could be anywhere. But I would highly recommend them, and the ADCPA firms can provide you that information. And now you’ll have science on your side instead of anecdotal information.

Naren Arulrajah: Thank you, Gary. Um, I just mentioned about, you know, you helping your clients set the correct fees based on their market—because a lot of practices haven’t adjusted it in a long time. If anyone is interested, Gary, is it okay if I give them your coaching strategy meeting link? ThrivingDentist.com/csm 

Gary Takacs: Yeah, please.

And, Naren, just to amplify that—this is something we now do with all of our coaching clients. We annually review your fee schedule on a scientific basis, based on a zip code study. These are fees based on your zip code—not some random, you know, East Coast fees, Midwest fees, West Coast fees. That’s not useful.

Because on the West Coast, you could be in a big city like Seattle, or you could be in a small coastal town. And those fees are going to be different. However, this is tied specifically to your zip code.

And when we did this with our clients, Naren, it was a bit sobering to see that their fees were all over the map in terms of percentiles—in terms of what percentile you choose to have your fee schedule at. They were all over the map.

And our clients reported that this was extremely informative, because prior to this, they had no genuine scientific knowledge of how to set their fees.

Yeah, I’d be happy to. Again, that’s ThrivingDentist.com/csm —it stands for Coaching Strategy Meeting. It opens up my Zoom calendar. Just pick a time that works, and you’ll be meeting with me.

And I’d love to talk to you about that—as well as whatever else is on your mind. Maybe after our discussion in the Coaching and Action section, what might be on your mind is: “How do I resign from Delta?” You’ll have my rapt attention if that’s one of your questions. I’m passionate about that one.

Naren Arulrajah: Thank you, Gary. Let me go to question number three. And, um, I think these set of questions are awesome questions, and I think people have put a lot of thought into it. So thank you for sharing this.

This is about benefits: “So, we provide what I think is a very good benefits package for our team members—health insurance, matching 401(k) contributions, and generous paid time off. Should I consider eliminating some of these benefits to get my wage percentage on target?”

Gary Takacs: Wow, what a loaded question. And first of all, let me thank the doctor for asking that question. I can certainly understand thinking that—wow, maybe my benefits package is too rich.

Naren, let’s go to human nature for just a minute. You know, you’ve done a lot of work with Robert Cialdini and influence, I’ve done a lot of work with Robert Cialdini, and part of that helps you understand how people think and what guides their thinking. How do people feel when something’s taken away from them?

Naren Arulrajah: Uh, nobody’s happy. Like once they—I get it. For example, I know we do an annual bonus, and usually it’s like a holiday gift, and you can’t take that away even if we are having a crappy year because they’re used to it. They just expect it. You know what I mean?

Gary Takacs: Human nature—no one likes things taken away.

And I’m, you know, I have been a practice owner. So I’ve been in your seat as a practice owner, and I know I have to mind the budget. However, I think part of attracting and keeping the best team is putting together not only appropriate wages, but putting together an attractive benefits package.

We have clients in our coaching that are now drinking the Kool-Aid, and we’re seeing the results of it. They’re saying, “Gary, we aren’t experiencing what I hear at these local study club meetings where everyone’s whining about not being able to find a hygienist.” We’re just not having that problem—because my hygienists are really happy working in our practice.

And part of that is, I like to think, because of how we treat them—but it’s also because of how we compensate them.

So I personally think one of your goals—and they’re not mutually exclusive to being profitable—should be to provide a very attractive benefits package so you attract and keep the best team members.

So no, I wouldn’t cut those. I would solve it with supply-side economics. How much more do we have to produce to afford this? And now you’ve provided it in a win-win way instead of a win-lose.

If you cut the benefits, it’s a win for you. But what happens to them?

Naren Arulrajah: They lose.

Gary Takacs: It’s a lose. Exactly. What did Stephen Covey say about—what was habit number four?

Naren Arulrajah: Win-win.

Gary Takacs: Win-win. Not think win. 

Naren Arulrajah: Can I ask you a curveball question?

Naren Arulrajah: What if one of the people is not ideal? Would you still keep them and make them increase your wage percentage? Or would you say, “Yeah, let’s increase production, but let’s also get rid of the wrong people”?

Gary Takacs: Well, you know, I think that’s something that comes into play in practices—not infrequently—where we maybe mishired, right? We didn’t hire the right person. Maybe team members have reached a point where they’re not growing anymore.

One of the cultural items I’d like to encourage you to adopt—kind of a cultural aspect of your practice—would be that we embrace the concept of continuous learning, where we’re better tomorrow than we are today. Have that stand as something that you embrace and you expect with your team members.

So yeah, I think we have to have expectations around performance.

Naren Arulrajah: It’s like a top-performing team that’s paid really well with good benefits…

Gary Takacs: You’re not going to achieve your profitability goal in your practice by saving a dollar on a box of gloves. Yes, you might save a dollar, but it’s not going to make a difference in the overall scheme of things or the profitability in your practice.

You’re not going to hit your wage target of 28% or less by cutting back on PTO. You’re going to get there by building a high-performance team where everybody’s in the same boat, rowing in the same direction, and they’re partners with you to achieve supply-side economics.

And how we frame that, Naren, with your team, is we frame it in patient benefit terms. Imagine me talking to a team about this:

“Hey, one of our goals is to help more of our patients enjoy the benefits of great oral health. We also want to help more people in our community enjoy the benefits of great oral health. That’s what growth is all about.”

And by the way, growth then serves us as a practice. It serves you as a team member. And it serves our patients, who are the recipients of that care. So remember to sing that tune when you’re talking to your team about growth.

Naren Arulrajah: Thank you, Gary. Let me ask you the last question I have for you: Where can I start using AI to gain more productivity gains?

I guess they’re thinking wages, team members—this particular person is thinking about AI as a tool to drive more efficiency.

Gary Takacs: Well, um, I am up to my eyebrows right now in testing different applications of AI in practices all over the country. And I am very excited about some of the things that I see.

AI is just a continuation of something we’ve experienced, Naren, in dentistry for the last 35 to 40 years, and that’s simply how technology better serves us.

You know, there was a time—Naren, when I started in 1980—there was a time when the only way we had to reach our patients was a telephone call.

Naren Arulrajah: Right?

Gary Takacs: And we had to call people to confirm their appointments, right?

Today, if any of your offices—if you’re a listener and your offices are still calling to confirm—stop doing that now. Nobody’s going to answer. Yes, you could leave a voice message, but it’s futile. You should be sending your confirmation messages by text message—because where does it go? It goes right to their pocket or their purse.

Naren Arulrajah: Right.

Gary Takacs: So, efficiency. It’s just tech. It’s just another evolution. So, if you’re intimidated by AI, I’m just gonna say, hey—get over it. It’s just another advancement of technology.

I’m going to name maybe three different applications. One of them is on the clinical side—in terms of diagnosis.

Using AI for clinical diagnosis is the latest advance in technology to help us be more accurate in terms of diagnosis.

For example, I’m a big fan of Pearl. There are other companies that do this, but I’m a big fan of Pearl. Our clients that are using Pearl are telling me, “Oh my gosh, how in the world were we diagnosing without this?”

And in terms of how it presents the information to the patients in a visual way—case acceptance goes through the roof, because now they see what you’re seeing. So certainly, clinically, that can be very useful.

Naren Arulrajah: So you’re saying it’s diagnosing and helping patients understand what they need, and it comes from a third party—a trusted source. It’s adding even an extra layer of credibility. It’s not just the doctor saying it, it’s what the system is saying too.

Gary Takacs: It shows it to you in a very analytical way.

But also, there are tools on the admin side that we can be using AI for. For example, treatment notes—chart notes. There are still doctors that spend a painful amount of time individually fabricating the treatment notes.

And today, we’ve got AI that can do that—more accurately than you could ever do it yourself.

Writing a referral letter to a patient you’re sending to your oral surgeon, for example—that can all be done by AI.

Naren Arulrajah: Use case—it could write it in two minutes, and you just review it and say, “Yep.” And you can even tell it, “Hey, this patient is a little upset, so be, you know, softer.” You know what I mean? You can even massage it. You can even tell it to customize the letter.

Gary Takacs: Absolutely. You can literally provide some information that AI will then incorporate into the final product.

Another application—and some of you will bristle when I say this—but I’m gonna ask you to have an open mind: AI receptionist.

Think about it. One of the things we know, Naren—and you know it better than I do—offices think they are answering the phone the majority of the time during business hours. And what do you know about that, Naren?

Naren Arulrajah: Yeah, again, results may vary, but we have seen practices that literally miss half the phone calls they get.

Gary Takacs: Half the phone calls. So now you are doing your work with marketing by getting the phone to ring—but then the office isn’t answering the call.

Now, if this was 1980, the patient would call back.

Naren Arulrajah: Yeah, because they have no other choice. There’s no internet.

Gary Takacs: They got the voicemail back then, and they would call.

Naren Arulrajah: They did get voicemail—yes.

Gary Takacs: Today—what would they do?

Naren Arulrajah: They hang up. Like, I hardly ever see new patients leaving voicemails. It never happens. It’s almost like a unicorn. You never see it.

Gary Takacs: No one does that. They go to the next office on their Google search—and you lost a new patient. Marketing did their job. They got the phone to ring. Then you lost a new patient.

So, Arini—is an example of an AI receptionist. It’s early yet, and I’m gonna ask you to have an open mind, but I am seeing very, very good results. Think about the alternative of having a virtual receptionist answer the phones you’re missing—to a degree that the caller literally couldn’t tell the difference between whether it’s AI or one of your team members answering the phone.

And you might just have to take me at face value on that, but that’s what we’re seeing.

So there are definitely some applications of technology that can allow you to be a whole lot more efficient.

There are applications of AI to confirm benefits—for example, eligibility, following up on claims. There’s a lot of that that can streamline the admin operation of your practice.

So I would definitely say you want to be on the leading edge of that—not on the trailing edge.

If you want to know more about that, I’d be happy to talk to you about my experience with all of that. Schedule that coaching strategy meeting. I’ll share our resources. I’ll share the data with you. I’ll share what we’re using, and how we’re using it, and where I’m still sitting on the fence a little bit to have it proven out before I’m applying it.

Just go to ThrivingDentist.com/csm,  and let’s talk about AI.

Well, Naren, this has been fun. I hope I’ve shared some really useful information about tips to control your team member wages within budget. Lots to digest here.

This was one you might want to go back and listen to a couple of times.

But as we wrap up today, I want to take a minute and thank all of our listeners for the privilege of your time. Our goal is to provide useful, actionable information that you can use in every episode of The Thriving Dentist Show.

So thank you for the privilege of your time, and Naren and I look forward to connecting with you on the next Thriving Dentist Show.